News

Local Government Bids Goodbye to Jerry Brown. Is it Good Riddance?

Tue, 01/8/2019

By Robb Korinke

I once heard Jerry Brown describe being Governor of California as being “like a golf ball on top of a water spout. You kinda spin around and try stay on top of it.” This was a few years before his return to the Governor’s mansion, and perhaps he thinks differently after a widely lauded encore these past 8 years. As countless glowing and deserved retrospectives -- from Rolling Stone to the Wall Street Journal -- have outlined, Brown’s second tenure can only be viewed as an overall success, particularly given the “ungovernable” state he inherited.

How ungovernable you say? In 2009 the Guardian called us a “failed state.” The Economist called us “broken” and all but endorsed calls for a state Constitutional Convention. Brown took office in 2011 with unemployment at 12.4%, and a budget deficit of $25 billion. The state had overcrowded prisons, the worst bond rating among all 50 states and a pension “time bomb”

A mix of reforms and new taxes -- and a booming economy -- have made much of this all so much ancient history. The crux of Brown’s legacy now after his encore administration is one of fiscal prudence, an economic “turnaround” and environmental leadership on a global scale. The coming months will tell if Governor Newsom intends to embrace the former goals, though in fairness his inaugural went out of its way to reassure regarding his fiscal restraint. No one doubts his commitment to the latter.

I’ve been thinking these last weeks about Brown’s legacy specifically with respect to local government. I can’t help but think that local governments might be just be saying good riddance to Governor Brown. Would it be too much to say Jerry Brown was possibly the worst Governor for California local governments?

What makes a governor “good” for local governments? Brown was always a fan of Latin, so how about "Primum non nocere" (first, do no harm). Leave their budgets whole, don’t load them up with mandates. Past that, fix structural issues that put local agencies at risk financially, or make it hard for them to do their jobs. By this standard would Brown, a former mayor, be called a friend of local government?

Brown left the state (a lot) better than he found it and brought substance and gravitas to the Capitol. That he may not be missed by local government may be partly because Brown’s second stint followed what might have been the best Gubernatorial Administration for local governments in modern history. If for no other reason, securing Schwarzenegger’s (sometimes reluctant) embrace of 2004’s Prop 1A was a titanic achievement for cities and counties, and redefined them as political players in the Capitol. More importantly, 1A protected local coffers from billions of dollars per year in “state raids” that were a fixture of the protracted state budget fights of yesteryear.

So Against chronic deficits Schwarzenegger helped draw a moat around local finances, whereas Brown was… less protective of local finance. More on that in a moment.

Brown is a philosopher as much as he’s ever been a politician, and his marquee efforts with regard to local government reflected both immediate necessity but also often large ideas about governance. He touted a concept of “subsidiarity” for local governments, implicitly a suggestion of autonomy. “Devolution” was ostensibly a nod to local control and a way forward for the ungovernable state.

In practise this was done often abruptly, often without real structure for accountability and transparency. “Devolution” of really sticky problems sometimes felt like so many hot potatoes being tossed out of the Capitol into local agencies across the state.

This was evident in both Realignment and the Local Control Funding Formula. How were local county jails prepared to take tens of thousands of inmates, or local parole officers ready to oversee early releases? What tools were in place to track spending under the Local Control Funding Formula -- or more importantly, progress for the students it was purported to help? These are rhetorical questions.

Now years in, can we call the Local Control Funding Formula a success? I think we might fairly grade it an “Incomplete”. Realignment achieved its main goal of getting the state out of its consent decree on prison population and it set about a long overdue reform on harsh sentencing that a bulk of Californians wanted, and in many corners still want more of. Many would also tie realignment to the rise in homelessness and property crime. These issues are debatable and the reforms perhaps inevitable absent more prisons -- which no one wants but maybe the CCPOA -- but the swift and not altogether smooth implementation of realignment was hardly a gift to locals.

Elsewhere Brown also tackled the State Budget, as he had pledged to do in his 2010 campaign. He moved quickly to put a sales tax measure (Prop 30) on the 2012 ballot to protect school funding, but also made his most stinging move against local government: Redevelopment (RDA) elimination.

Fewer than 1 in 4 mayors and councilmembers remain in office from when Brown was inaugurated back in 2011. That’s natural turnover in local government, it also means most locals have scant memory of life before Redevelopment.

Yes, RDA’s were problematic. Remember the Sacramento “Mermaid Bar”? It was a lighthouse example of misuse of these programs, and the often elastic definition of “blight” used to absorb property in furtherance of the agency’s mission. RDAs were also an undeniable engine of economic activity and probably the single best tool for creating affordable housing.

By some estimates RDA elimination has cost over $6 billion in affordable housing money. Over 400 cities had RDA agencies/programs and the staffing losses have never been recovered by cities, nor the scope and scale of economic development initiatives. Yes cities abused these agencies to fund personnel. Yes there were questionable issues around eminent domain. Yes, Brown himself lived in a Redevelopment project in Oakland whilst mayor! But I digress.

It is difficult to overstate the impact of RDA elimination on cities. It was a mistake. It left California as one of just two states without a vehicle for tax increment financing. Brown and the legislature have spent the last 5 or 6 years bringing it back piecemeal. It never should have wholly eliminated in the first place.

On the heels of RDA elimination came Enterprise Zones. Also problematic in many ways, also a key economic development tool, similarly sacrificed on the altar of balanced state budget.

All told the elimination of these programs cost billions in lost housing funding, in lost economic activity and in job loss, and all for a paltry return. #Fail.

Bigger than the state budget was, and still is, pension obligations. Yes cities and counties partially got themselves into the situation they’re in, but with a lot of help from Sacramento.

In 2013 Brown signed the California Public Employees' Pension Reform Act of 2013 (PEPRA), tackling “pension spiking”. Brown’s pension efforts have trimmed the problem but local pension obligations continue to balloon, and a true economic downturn (and attendant hiked CalPERS payments) would prompt multiple municipal bankruptcies. A pending CA Supreme Court decision on the “California Rule” for pensions could see even Brown’s relatively modest pension reforms rolled back. A “win” for Brown’s position on the “California Rule” would see immediate and difficult fights at the local level over how individual agencies are going to treat vested rights. This remains a massive issue.

Imperium in Imperio

So now Brown hands Newsom a state with a budget surplus and that no one besides Tucker Carlson would reasonably call a failure -- though with very legitimate issues in the form of a housing crisis, crumbling infrastructure, lagging public schools and unresolved fiscal problems. Local governments are on the front lines of many of these problems, and arguably now with even more responsibilities and fewer tools to respond.

Counting these very large structural issues, I’d also argue that when lean economic times return so will the “ungovernable” headlines. Nothing substantial has been done to change the state’s reliance on IPOs and high earners to balance its budget, in fact you could argue we are more reliant on high earners than ever.

Even if the budget continues in good stead, Counties will have much at stake in the forthcoming debates in the Capitol on healthcare, possibly early childhood education as well. Cities will be watching how and if Newsom makes good on his commitment to address the housing crisis and homelessness.

I think the biggest early “tell” of how Newsom intends to regard local government will be at the intersection of his housing pledge and local land use authority. Sen. Scott Wiener has already reintroduced his failed proposal from last year to override local control for housing developments near transit centers.

Local Land Use authority is basically one of the core reasons for many cities to exist. Losing it to this kind of preemption would be a massive blow to local control, and will also be a test for the relatively new leadership at CSAC, the League of Cities and various other local government lobbying associations.

Newsom has promised to “be bold”. That’s his brand and a pledge embraced by many Californians, but if Jerry Brown didn’t tackle tax/state budget reform, and couldn’t reform pensions to keep local governments solvent, do we really think Gavin Newsom will? A budget crisis would arguably be the first real test of Newsom’s political career, which has heretofore been largely smooth sailing. I wish him the best, let's hope some of the simmering issues for local governments get addressed this time around.